• Mesa Air Group Reports Second Quarter Fiscal 2022 Results

    Source: Nasdaq GlobeNewswire / 09 May 2022 15:01:01   America/Chicago

    PHOENIX, May 09, 2022 (GLOBE NEWSWIRE) -- Mesa Air Group, Inc. (NASDAQ: MESA) today reported second quarter fiscal 2022 financial and operating results.

    Financial Summary Q2:

    • Pre-tax loss of $55.2 million, net loss of $42.8 million or $(1.19) per diluted share.
    • Adjusted net loss1 of $10.3 million or $(0.29) per diluted share.
    • Adjusted net loss excludes a $39.5 million (pre-tax) non-cash charge related to 12 CRJ aircraft held for sale.

    Quarter Highlights:

    • Mesa took delivery of its third 737-400F freighter aircraft in the quarter.
    • Added an additional E175 flight simulator.

    Fiscal Year Q2 Results:

    Mesa’s Q2 FY22 results reflect a net loss of $42.8 million, or $(1.19) per diluted share, compared to net income of $5.7 million, or $0.14 per diluted share for Q2 FY21. Mesa’s Q2 FY22 adjusted pre-tax loss1 was $13.1 million versus an adjusted pre-tax income1 of $12.1 million in Q2 FY21. The year over year decrease in adjusted pre-tax income of $25.2 million was primarily due to lower block hours and the impact of the PSP program.

    Jonathan Ornstein, Chairman and CEO, said, “While demand for our product remains strong, our financial results this quarter reflect the ongoing challenge of heightened pilot attrition. In January, our operational and financial performance was significantly impacted by Covid-related higher pilot absence rates which have since subsided. We remain focused on taking steps to address pilot attrition, including increased hiring, simulator capacity, and training capabilities, which has been exacerbated by the industry wide pilot shortage.”

    Fiscal Q2 details:

    Total operating revenues in Q2 2022 were $123.2 million, an increase of $25.9 million (26.7%) from $97.3 million for Q2 2021. Contract revenue increased $30.3 million. This was due to the return to normal rates from our partners which were temporarily reduced last year related to the PSP program. These were partially offset by a reduction in block hours. Mesa’s Q2 2022 results include, per GAAP, the recognition of $0.8 million of previously deferred revenue, versus the deferral of $4.9 million of revenue in Q2 2021. The remaining deferred revenue balance will be recognized as flights are completed over the remaining terms of the contracts.

    Mesa’s Adjusted EBITDA1 for Q2 2022 was $15.8 million, compared to $41.5 million in Q2 2021, and Adjusted EBITDAR1 was $25.2 million for Q2 2022, compared to $51.5 million in Q2 2021.

    Operationally, the Company ran a controllable completion factor of 96.8% for American and 96.7% for United during Q2 2022. This is compared to a controllable completion factor of 99.8% for American and 100.0% for United during Q2 2021. This excludes cancellations due to weather and air traffic control. As Covid-related cancellations declined, our controllable completion factors for both American and United were both 99.9% for the month of March.

    With respect to a total completion factor that includes all cancellations, Mesa reported a total completion factor of 93.5% for American and 93.7% for United during Q2 2022. This is compared to a total completion factor of 95.0% for American and 94.2% for United during Q2 2021.

    1 See Reconciliation of non-GAAP financial measures

    Liquidity and Capital Resources:

    Mesa ended the quarter at $75.9 million in unrestricted cash and equivalents. As of March 31, 2022, the Company had $652.0 million in total debt secured primarily with aircraft and engines.

    Fleet:

    For the three months ended March 31, 2022, 47% of the Company’s total revenue was derived from our contracts with United, 46% from American, 1% from DHL, and 6% from leases of aircraft to a third party.

    Below is our current and future fleet plan by partner and fleet type for FY22:

    Fleet Plan (FY22)Q1 (Dec '21)Q2 (Mar '22)Q3 (Jun '22)Q4 (Sep '22)
     ActualActualForecastForecast
    E-175 – UA80808080
    CRJ-900 – AA40404040
    737-400F – DHL2333
    Sub-total122123123123
    CRJ-700 Leased17182020
    CRJ-700 to be Leased    
    to Third party32--
    CRJs Spares/Parked25131313
    CRJs Held for Sale-121212
    Total Fleet167168168168


    Mesa Air Group will host a conference call with analysts on May 9th at 4:30 pm EDT. The conference call number is 888-469-2054 (Passcode: Phoenix (7463649)). The conference call can also be accessed live via the web by visiting https://investor.mesa-air.com.

    A recorded version will be available on Mesa's website approximately two hours after the call for approximately 14 days.

    1Reconciliation of non-GAAP financial measures

    Although these financial statements are prepared in accordance with accounting principles generally accepted in the U.S. ("GAAP"), certain non-GAAP financial measures may provide investors with useful information regarding the underlying business trends and performance of Mesa's ongoing operations and may be useful for period-over-period comparisons of such operations. The tables below reflect supplemental financial data and reconciliations to GAAP financial statements for the three and six months ended March 31, 2022 and March 31, 2021. Readers should consider these non-GAAP measures in addition to, not a substitute for, financial reporting measures prepared in accordance with GAAP. These non-GAAP financial measures exclude some, but not all items that may affect the Company's net income or loss. Additionally, these calculations may not be comparable with similarly titled measures of other companies.

    1Reconciliation of GAAP versus Non-GAAP Disclosures
    (In thousands, except for per diluted share) (Unaudited)

     Three Months Ended March 31, 2022 Three Months Ended March 31, 2021
     Income (Loss) Before TaxesIncome Tax (Expense)/ BenefitNet Income (Loss) Net Income (Loss) per Diluted Share  Income Before TaxesIncome Tax (Expense)/ BenefitNet Income  Net Income per Diluted Share
    GAAP Income (Loss)$(55,165)12,382 (42,783)$(1.19) $7,579 (1,890)5,689 $0.14
    Adjustments (1) (2) (3) 39,843 (9,097)30,746 $0.85   4,508 (1,124)3,384 $0.09
    Loss on Investments, Net (4) 2,261 (522)1,739 $0.05       
    Adjusted Income (Loss) (13,061)2,763 (10,298)$(0.29)  12,087 (3,014)9,073 $0.23
               
    Interest Expense 8,120      8,755     
    Interest Income (42)     (79)    
    Depreciation and Amortization 20,747      20,705     
    Adjusted EBITDA 15,764      41,468     
               
    Aircraft Rent 9,434      9,992     
    Adjusted EBITDAR$25,198     $51,460     

    (1) Includes adjustment for lease termination expense of $4.5 million for the three months ended March 31, 2021 related to the purchase of a CRJ-900 aircraft, which was previously leased from Bombardier Capital.
    (2) Includes adjustment for impairment charges of $39.5 million for the three months ended March 31, 2022 related to certain of the Company's aircraft which are classified as held for sale.
    (3) Includes adjustment for operating lease right of use asset impairment charges of $0.4 million during the three months ended March 31, 2022 related to the abandonment of one of the Company's leased facilities.
    (4) Includes losses resulting from changes in the fair value of the Company's investments in equity securities of $2.3 million for the three months ended March 31, 2022.

               
     Six Months Ended March 31, 2022 Six Months Ended March 31, 2021
     Income (Loss) Before TaxesIncome Tax (Expense)/ BenefitNet Income (Loss)Net Income (Loss) per Diluted Share Income Before TaxesIncome Tax (Expense)/ BenefitNet Income
    Net Income per Diluted Share
    GAAP Income (Loss)$(73,551)16,494 (57,057)$(1.58) $26,518 (6,711)19,807 $0.52
    Adjustments (1)(2)(3)(4) 39,843 (9,097)30,746 $0.85   3,558 (900)2,658 $0.07
    Loss on Investments, Net (5) 8,723 (1,992)6,731 $0.19       
    Adjusted Income (Loss) (24,985)5,405 (19,580)$(0.54)  30,076 (7,611)22,465 $0.59
               
    Interest Expense 16,050      17,837     
    Interest Income (93)     (205)    
    Depreciation and Amortization 41,775      41,175     
    Adjusted EBITDA 32,747      88,883     
               
    Aircraft Rent 19,020      20,040     
    Adjusted EBITDAR$51,767     $108,923     

    (1) Includes adjustment for gain on extinguishment of debt of $1.0 million related to repayment of the Company’s aircraft debts during the six months ended March 31, 2021.
    (2) Includes adjustment for lease termination expense of $4.5 million for the six months ended March 31, 2021 related to the purchase of a CRJ-900 aircraft, which was previously leased from Bombardier Capital.
    (3) Includes adjustment for impairment charges of $39.5 million for the six months ended March 31, 2022 related to certain of the Company's aircraft which are classified as held for sale.
    (4) Includes adjustment for operating lease right of use asset impairment charges of $0.4 million during the six months ended March 31, 2022 related to the abandonment of one of the Company's leased facilities.
    (5) Includes losses resulting from changes in the fair value of the Company's investments in equity securities of $8.7 million for the six months ended March 31, 2022.

    About Mesa Air Group, Inc.

    Headquartered in Phoenix, Arizona, Mesa Air Group, Inc. is the holding company of Mesa Airlines, a regional air carrier providing scheduled passenger service to 110 cities in 40 states, the District of Columbia, the Bahamas, and Mexico as well as cargo services out of Cincinnati/Northern Kentucky International Airport. As of March 31, 2022, Mesa operated a fleet of 168 aircraft with approximately 349 daily departures and 2,800 employees. Mesa operates all of its flights as either American Eagle, United Express, or DHL Express flights pursuant to the terms of capacity purchase agreements entered into with American Airlines, Inc., United Airlines, Inc., and DHL.

    Forward-Looking Statements

    Certain statements contained in this press release that are not historical facts contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, that are subject to the “safe harbor” created by those sections. Forward-looking statements can be identified by the use of words such as “estimate,” “anticipate,” “expect,” “believe,” “intend,” “may,” “will,” “should,” “seek,” “approximate” or “plan,” or the negative of these words and phrases or similar words or phrases. Forward-looking statements, by their nature, involve estimates, projections, goals, forecasts and assumptions and are subject to risks and uncertainties that could cause actual results or outcomes to differ materially from those expressed in the forward-looking statements. For more information on risk factors for Mesa Air Group, Inc.’s business, please refer to the periodic reports the Company files with the Securities and Exchange Commission from time to time. Many of the risks identified in the periodic reports have been and will continue to be heightened as a result of the ongoing and numerous adverse effects arising from the COVID-19 pandemic. These forward-looking statements herein speak only as of the date of this press release and should not be relied upon as predictions of future events. Mesa Air Group, Inc. expressly disclaims any obligation or undertaking to update or revise any forward-looking statements contained herein, to reflect any change in Mesa Air Group, Inc.’s expectations with regard thereto, or any other change in events, conditions or circumstances on which any such statement is based, except as required by law.

    MESA AIR GROUP, INC.
    Condensed Consolidated Statements of Operations
    (In thousands, except per share amounts) (Unaudited)

      Three Months Ended
    March 31,
     Six Months Ended
    March 31,
       2022   2021   2022   2021 
    Operating revenues:        
    Contract revenue $111,988  $81,712  $248,882  $208,870 
    Pass-through and other revenue  11,225   15,568   22,088   38,781 
    Total operating revenues  123,213   97,280   270,970   247,651 
             
    Operating expenses:        
    Flight operations  42,410   37,403   90,008   74,367 
    Maintenance  47,357   51,773   106,338   104,637 
    Aircraft rent  9,434   9,992   19,020   20,040 
    General and administrative  7,860   11,164   20,438   24,237 
    Depreciation and amortization  20,747   20,705   41,775   41,175 
    Lease termination     4,508      4,508 
    Impairment of assets held for sale  39,475      39,475    
    Other operating expenses  685   941   2,657   2,232 
    Government grant recognition     (55,967)     (67,278)
    Total operating expenses  167,968   80,519   319,711   203,918 
    Operating income (loss)  (44,755)  16,761   (48,741)  43,733 
             
    Other income (expense), net:        
    Interest expense  (8,120)  (8,755)  (16,050)  (17,837)
    Interest income  42   79   93   205 
    Loss on investments, net  (2,261)     (8,723)   
    Other income (expense), net  (71)  (506)  (130)  417 
    Total other (expense), net  (10,410)  (9,182)  (24,810)  (17,215)
             
    Income (loss) before taxes  (55,165)  7,579   (73,551)  26,518 
    Income tax expense (benefit)  (12,382)  1,890   (16,494)  6,711 
    Net income (loss) $(42,783) $5,689  $(57,057) $19,807 
             
    Net income (loss) per share attributable to common shareholders        
    Basic $(1.19) $0.16  $(1.58) $0.56 
    Diluted $(1.19) $0.14  $(1.58) $0.52 
             
    Weighted-average common shares outstanding        
    Basic  36,048   35,628   36,005   35,579 
    Diluted  36,048   39,432   36,005   38,382 


    MESA AIR GROUP, INC.
    Condensed Consolidated Balance Sheets
    (In thousands, except shares) (Unaudited)

      March 31,
    2022
     September 30,
    2021
    ASSETS   
         
    CURRENT ASSETS:    
    Cash and cash equivalents $75,896 $120,517
    Restricted cash  3,351  3,350
    Receivables, net  6,849  3,167
    Expendable parts and supplies, net  26,255  24,467
    Prepaid expenses and other current assets  7,608  6,885
    Total current assets  119,959  158,386
         
    Property and equipment, net  1,064,349  1,151,891
    Intangible assets, net  6,281  6,792
    Lease and equipment deposits  8,371  6,808
    Operating lease right-of-use assets  79,706  93,100
    Deferred heavy maintenance, net  5,289  3,499
    Assets held for sale  36,528  
    Other assets  32,873  36,121
    TOTAL ASSETS $1,353,356 $1,456,597
         
    LIABILITIES AND STOCKHOLDERS’ EQUITY   
         
    CURRENT LIABILITIES:    
    Current portion of long-term debt and finance leases $111,671 $111,710
    Current portion of deferred revenue  2,675  6,298
    Current maturities of operating leases  16,601  32,652
    Accounts payable  76,733  61,476
    Accrued compensation  10,285  12,399
    Other accrued expenses  31,406  33,657
    Total current liabilities  249,371  258,192
         
    NONCURRENT LIABILITIES:    
    Long-term debt and finance leases, excluding current portion  521,457  539,700
    Noncurrent operating lease liabilities  29,936  33,991
    Deferred credits  3,508  3,934
    Deferred income taxes  53,281  69,940
    Deferred revenue, net of current portion  26,868  28,202
    Other noncurrent liabilities  36,394  34,591
    Total noncurrent liabilities  671,444  710,358
          Total liabilities  920,815  968,550
         
    STOCKHOLDERS' EQUITY:    
    Preferred stock of no par value, 5,000,000 shares authorized; no shares issued and outstanding    
    Common stock of no par value and additional paid-in capital, 125,000,000
    shares authorized; 36,126,724 (2022) and 35,958,759 (2021) shares issued
    and outstanding, and 4,899,497 (2022) and 4,899,497 (2021) warrants
    issued and outstanding
      257,923  256,372
    Retained earnings  174,618  231,675
    Total stockholders' equity  432,541  488,047
    TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $1,353,356 $1,456,597


    MESA AIR GROUP, INC.
    Operating Highlights (unaudited)

      Three months ended
      March 31
      2022 2021 Change
    Available Seat Miles (thousands) 1,616,896 1,771,498 -8.7%
    Block Hours 65,613 73,942 -11.3%
    Average Stage Length (miles) 671 690 -2.8%
    Departures 31,983 35,270 -9.3%
    Passengers 1,921,635 1,684,043 14.1%
    Controllable Completion Factor*      
    American 96.76% 99.83% -3.1%
    United 96.71% 99.99% -3.3%
    Total Completion Factor**      
    American 93.51% 95.01% -1.6%
    United 93.74% 94.22% -0.5%

    *Controllable Completion Factor excludes cancellations due to weather and air traffic control
    **Total Completion Factor includes all cancellations

    Source: Mesa Air Group, Inc.

    Mesa Air Group, Inc.
    Media
    Jacqueline Palmer
    Media@mesa-air.com

    Investor Relations
    Susan M. Donofrio
    IR@mesa-air.com


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